Meta is still flinging the equivalent of a small country's annual GDP down the Reality Labs money pit each and every quarter

Meta's second quarter earnings are in, reporting revenue of $60.80 billion. That's another record-breaking year-on-year increase of about 28%, though shares are reportedly down by about 10% . Funny, that. Now, time to take a look at how the company's famous money-hole, its VR and AR division, Reality Labs, is doing while I take a big sip of my coffee…

A $4.6 billion income loss due to Reality Labs alone this quarter ? Well, there goes my keyboard. That's compared to the division bringing in $431 million in revenue. I may have only got a passing grade in Math, but even I can see those numbers don't add up.

To be fair to this segment of the business, that $431 million represents a 16% year-over-year increase in quarterly revenue. In Meta's latest earnings call , CFO Susan Li attributed these revenue gains to "strong growth in AI glasses revenue, partially offset by lower Quest headset sales." Company CEO Mark Zuckerberg was also keen to highlight the success of Meta's glasses, describing it as "one of the fastest-growing consumer electronics of all time."

Zuckerberg added that early sales of the frames the company designed in collaboration with Kylie Jenner "have been strong, exceeding our expectations" (As you may expect, the Meta execs had nothing to say about those They Live-inspired guerilla bus stop ads that recently popped up in London ).

But, as the numbers show, that demand doesn't make up the shortfall. On the subject of wearables, spending on Orion, Meta's still unreleased AR glasses with an EMG wristband and a 'Compute Puck' , likely also make up a decent chunk of the change spent on Reality Labs (despite Meta struggling to come up with 'killer use case' for the device ). Last year, the company was also reportedly hard at work on developing the Meta Quest 4 VR headset , but has pushed back another Mixed Reality project, Phoenix, until 2027. All of these hardware projects would require considerable spend.

So continues a multi-quarter trend for this segment of the business. Meta lost $19.1 billion on its VR and AR division alone last year , then the company closed three VR studios and laid off roughly 10% of Reality Labs . This is far from just recent bad luck either, with Meta reporting significant VR and AR-related losses in 2024 , 2023 , and 2022 .

It's not hard to understand considering that, for most gamers, AR and VR represent an expensive niche within an increasingly pricey niche. But will next quarter grant something of a sea change? Personally, I doubt it.

Indexed and credited by AIPROPX. Originating outlet: PC Gamer. Open at source →